Watch out for the Storm!

Storm Financial Office Photo: ABC

Storm Financial Office Photo: ABC

The one thing I’m grateful for this year: not getting advise from Storm Financial.

With the biggest financial collapse in Australian history Storm Financial have suffered a collective loss of $3 billion! Yes that’s correct – 3  billion dollars! I know the economic recession is affecting financial instituions around the world but I don’t think that’s the real reason this company went under so easily.

The Townsville Bulliten reported that fraud and criminal behaviour could be uncovered in an investigation into Storm Financial with failures occuring not only with Storm’s financial model but with also with their regulation and behaviour. Out of 130 staff only 10 are FPA members! And now several of the firm’s advisors are back in business employed by Infocus money management. Storm’s founder, Emmanuel Cassimatis’ employment history is even more interesting. The Sydney Morning Herald reports:

And while it’s been regularly mentioned that Cassimatis’ worked for MLC before setting up Storm, what’s not reported is that MLC parted ways with him after having trouble with Cassimatis over-gearing clients who could not reasonably be expected to be able to service their loans. Other advisers dumped by MLC ended up in the Storm stable.  

SMH also says that Storm was ripping ridiculous fees out of gullible clients, giving dangerous advise and double-dipping on comissions. So who is really to blame? As SMH puts it – the inexperienced and financially uneducated clients? Or the manipulative advisors?

The ABC News gives us a little insight into how the clients are feeling at the moment. One couple has been left high and dry owing $370,000 on their house and another $10,000 on a margin loan.

The bank’s blaming Storm and Storm is blaming the banks and somebody is not telling the truth and hopefully ASIC [the Australian Securities and Investments Commission] will find out the truth.

 The fact that the ASIC is conducting the inquiry doesn’t inspire much confidence – considering they investigated Storm last year and found nothing wrong! How very ironic.

Published in: on April 20, 2009 at 6:18 am  Leave a Comment  

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